Axa Sa · EURONEXT:CS
Axa Sa — H1 2007 Earnings Presentation
65 slides from Axa Sa's earnings presentation, Aug 9, 2007
Slide 1: Half Year 2007 Earnings
Half Year 2007 Earnings August 9, 2007 PRESS CONFERENCE
Slide 2: Cautionary statements concerning forward-looking statements
Cautionary statements concerning forward-looking statements Certain statements contained herein are forward-looking statements including, but not limited to, statements that are predications of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statem
Slide 3: Definitions
Definitions AXA's HY07 results have been prepared in accordance with IFRS and interpretations applicable and endorsed by the European Commission at June 30 2007 and have been subject to a limited review by AXA's independent auditors. Adjusted earnings, underlying earnings and Life & Savings NBV are
Slide 4: Important notes
Important notes The definition of change on a comparable basis is : For activity indicators, constant exchange rates and scope (notably, Winterthur’s contribution is included in 2006 and 2007 figures) For earnings and profitability indicators, constant exchange rates (excluding Winterthur both in
Slide 5: Table of contents
Table of contents 1 : First Half 2007 key highlights 2 : Overview of 1H07 financial performance 3 : Balance sheet and equity as of June 30, 2007 4 : Outlook FY07 5 : Appendices Half Year 2007 Earnings – August 9, 2007 – 5
Slide 6: First half 2007 key highlights
First half 2007 key highlights Higher interest rates and favorable markets European natural catastrophes and softening P&C market Context Concerns about US subprime residential mortgage loans Positive developments on Solvency II Strong financial performance Revenues +24%(1) NBV +21%(1) Und
Slide 7: Life and Savings: APE continued to grow at a double digit pace
Life & Financial Winterthur 2012 Savings performance action plan Life and Savings: APE continued to grow at a double digit pace Annual Premium New Business Equivalent Value (Euro million) (Euro million) +11% 3,877 +9% NBV growth impacted by: • Positive business mix 851 • Unfavorable country mix 1H07
Slide 8: Property and Casualty: Combined ratio remained solid despite Natural Cat events
Financial Winterthur 2012 performance action plan Property and Casualty: Combined ratio remained solid despite Natural Cat events Revenues Combined Ratio (Euro million) +4% +1.6 pt 14,195 98.4% CR impacted by Nat Cat events: • "Kyrill" windstorm +1.9 pts • UK flood +1.0 pt 1H07 1H07 Avg. growth* FY0
Slide 9: Asset Management: Another half year of very strong performance
Financial Winterthur 2012 performance action plan Asset Management: Another half year of very strong performance Revenues Underlying cost income (Euro million) ratio +22% -1.4 pt 2,407 67.6% 1H07 1H07 Avg. growth* FY04-06 +21% Changes are on a comparable basis which corresponds: - for activity indic
Slide 10: Strong underlying earnings growth
Financial Winterthur 2012 performance action plan Strong underlying earnings growth Underlying earnings (Euro million) +19% 2,688 Winterthur Contribution: 2,079 €288m 1H06 1H07 On a reported basis △ from 1H06 +29% CAGR* FY04-06 +21% Changes are on a comparable basis which corresponds: - for activity
Slide 11: Underlying earnings benefit from diversified growth engines
Financial Winterthur 2012 performance action plan Underlying earnings continued to benefit from diversified growth engines Geographic breakdown of underlying earnings(1) (Euro million) +15% France 590 +25% North&East Europe Asia - Pacific +13% 571 247 +8% North America Mediterranean region +47% 549
Slide 12: Solid adjusted earnings growth
Financial Winterthur 2012 performance action plan Solid adjusted earnings growth Adjusted earnings (Euro million) +14% 3,424 2,830 Net realized capital gains 751 736 1H07 capital gains consistent with attributable to yearly target range shareholders No capital gains contributed by Winterthur as
Slide 13: Winterthur integration is on track
Financial Winterthur 2012 performance action plan Winterthur integration is on track… Winterthur former headquarters wind down completed Restructuring well underway… Negotiations with employees and unions are on track Top line growth according to plan …while maintaining organic growth… Profi
Slide 14: Restructuring program is well in line with targets
Financial Winterthur 2012 performance action plan …and restructuring program is well in line with targets 350 Euro million 315 235 Underlying Earnings 140 synergies 96 (Net of PB before Tax) 2007 2008 2009 2010 1H07 achievement Euro million Restructuring charges 82 560 (Net of PB before tax) 1H07 ac
Slide 15: In 1H07, we continued to pursue various initiatives
Financial Winterthur 2012 performance action plan In 1H07, we continued to pursue various initiatives… Distribution …continuing to build the foundation of our Products long term performance Risk & Capital Management Human Resources Half Year 2007 Earnings – August 9, 2007 – 15
Slide 16: Distribution initiatives: bancassurance agreements
Financial Winterthur 2012 performance action plan Distribution initiatives: we developed bancassurance agreements in Western Europe and new high growth markets,… Acquisition of 50% of MPS Vita and Danni 8% life (signed in March 2007) with a 20 year market share in Italy exclusive partnership in li
Slide 17: Increased presence in distribution and direct operations
Financial Winterthur 2012 performance action plan … increased our presence in distribution and reinforced our direct operations AXA France’s acquisition of Nationale Suisse Assurance (signed July 2007) strengthens its distribution network with 150 agents and 250 brokers Distribution UK’s 2nd lar
Slide 18: Product initiatives: roll-out of Variable Annuities
Financial Winterthur 2012 performance action plan Product initiatives included the roll-out of Variable Annuities in Key markets In the US, AXA is a leader in Variable Annuity business and continues to develop innovative products Roll-out of Variable Annuities in European and Asian markets is we
Slide 19: Risk and capital management initiatives
Financial Winterthur 2012 performance action plan Risk and capital management initiatives Disposal of Dutch (Euro 1.8bn) and Winterthur US P&C (Euro 1.4bn) operations Optimizing capital Euro 3.1 billion returned to Shareholders through management dividends (Euro 2.2bn), share buy-backs (Euro 0.6
Slide 20: HR initiatives: employee share allocation
Financial Winterthur 2012 performance action plan HR initiatives: we made each AXA employee a shareholder of the Group On July 1st, 50 free AXA shares have been allocated to over 100,000 AXA employees in 54 countries. All shares will be freely tradable after four years 50 additional shares wil
Slide 21: Table of contents
Table of contents 1 : First Half 2007 key highlights 2 : Overview of 1H07 financial performance 3 : Balance sheet and equity as of June 30, 2007 4 : Outlook FY07 5 : Appendices Half Year 2007 Earnings – August 9, 2007 – 21
Slide 22: High first half 2007 performance
High first half 2007 performance Change on Euro million 1H07 a reported Change on a comparable basis basis Life & Savings APE 3,877 +28% +11% For activity indicators Life & Savings NBV 851 +21% +9% Constant FX Winterthur included P&C revenues 14,195 +33% +4% in 2006 and 2007 figures Asset Manage
Slide 23: All operating business units contributed positively to underlying earnings
All operating business units contributed positively to 1H07 underlying earnings performance Change on Change on a Euro million 1H06 1H07 a reported comparable basis basis(1) Life & Savings 1,193 1,489 +25% +19% Property & Casualty 762 963 +26% +6% Asset Management 233 286 +23% +27% International Ins
Slide 24: Life & Savings: double digit APE growth
Life & P&C Asset Group Savings Management Life & Savings: double digit APE growth APE Change on a Proportion of Group share in Euro million, 1H07 comparable Unit Linked except change in % basis(1) products* US 1,107 +21% 71% France 642 +2% 26% Japan 308 -16% 19% UK 819 +26% 91% Germany 207 +2% 32% S
Slide 25: Business mix continued to improve NBV margin
Life & P&C Asset Group Savings Management Business mix continued to improve NBV margin both at AXA and Winterthur, offset by a slower growth in a few high margin countries +yypts Change on a comparable basis (1) Winterthur 20.7 % 21.3 % AXA + Winterthur Business mix +0.8 pt Country mix +0.2 pt 2
Slide 26: NBV growth per country & region
Life & P&C Asset Group Savings Management NBV growth per country & region NBV Change on a 1H07 Change on a Group share in Euro million, 1H07 comparable NBV/APE comparable except change and margin in % basis(1) margin basis(1) US 217 +9% 19.6% -2.2 France 106 +5% 16.5% +0.4 Japan 192 +1% 62.3% +10.6
Slide 27: Businesses in all countries reported positive underlying earnings growth
Life & P&C Asset Group Savings Management Businesses in all countries reported positive underlying earnings growth Underlying earnings Change on a 1H06 1H07 comparable (Euro million) basis(1) US 488 488 +8% France 308 353 +15% Japan 130 133 +3% UK 80 136 +65% Germany 28 73 +99% Switzerland 3 82 n/a
Slide 28: Property & Casualty environment: contrasting trends
Life & P&C Asset Group Savings Management Property & Casualty environment: contrasting trends across segments and markets Renewal pricing trends (1H 2007 renewal average premium change from 12/2006) > +5% BE FR BE +2% / +5% FR FR +0% / +2% GER IT BE IT FR -2% / -0% GER IT BE FR BE IT GER -5% / -2% G
Slide 29: Good P&C sales performance in a competitive pricing environment
Life & P&C Asset Group Savings Management Good P&C sales performance in a competitive pricing environment Change on a IFRS Revenues 1H07 comparable (Euro million) basis(1) France 2,895 +2% United Kingdom & Ireland 2,723 +8% Personal lines: +5% Germany 2,202 +2% Individual motor net inflows of +631,0
Slide 30: Combined ratio was impacted by Natural Catastrophes events
Life & P&C Asset Group Savings Management Combined ratio was impacted by Natural Catastrophes events Combined ratio(1) Change on a Ratios in % 1H07 comparable basis (2) Loss, excl. CHC(3) 65.9 +1.4 Claims handling 4.6 +0.0 (2) +1.6 pt 97.5% 98.4% Loss Ratio 70.5 +1.5 97.0% Acquisition exp. 18.2 +0.6
Slide 31: Robust underlying earnings growth despite Nat Cat events
Life & P&C Asset Group Savings Management Robust underlying earnings growth despite a series of Nat Cat events Underlying earnings Change on 1H06 1H07 comparable (Euro million) basis(1) Net technical result(2) 295 194 -54% Net investment income(3) 861 1,108 +9% Tax & Minority interests & others(4) -
Slide 32: Property & Casualty underlying earnings by country
Life & P&C Asset Group Savings Management Property & Casualty underlying earnings by country Underlying earnings Change on a 1H06 1H07 comparable (Euro million) basis(1) France 207 237 +14% Germany 117 158 +17% Belgium 90 108 -8% UK & Ireland 181 129 -30% Southern Europe 79 162 +48% Switzerland 3 73
Slide 33: Assets managed by AllianceBernstein and AXA IM continued to grow
Life & P&C Asset Group Savings Management Assets managed by AllianceBernstein and AXA IM continued to grow at a strong pace… Euro billion +14%(1) 61 1,153 48 -17 33 1,029 FY06 AUM Net inflows Market Transfer of FX & others 1H07 AUM appreciation Winterthur AUM (1) At constant exchange rates including
Slide 34: AllianceBernstein's strong revenues and improving cost income ratio
Life & P&C Asset Group Savings Management AllianceBernstein’s strong revenues and improving cost income ratio resulted in a 21% underlying earnings growth Euro million 1,552 1,417 +19% Revenues (1) Net Inflows: 1H06 1H07 Euro +17 billion AUM: 69.3% -0.7pt 68.6% Underlying cost Euro 587 billion incom
Slide 35: AXA Investment Managers' strong revenues and improving cost income ratio
Life & P&C Asset Group Savings Management AXA Investment Managers’ strong revenues and improving cost income ratio resulted in a 35% underlying earnings growth Euro million 855 674 +28%* Revenues(1) Net Inflows: 1H06 1H07 Euro +15 billion 68.6% AUM: Underlying cost -2.9pts Euro 566 billion 65.7% inc
Slide 36: From underlying earnings to net income
Life & P&C Asset Group Savings Management From underlying earnings to net income Profit/loss on financial assets under Euro million 1H06 1H07 FV option and derivatives: mainly explained by lower impact than 1H06 of higher interest rates in 1H07 on the fair value of interest rate derivatives and Un
Slide 37: Table of contents
Table of contents 1 : First Half 2007 key highlights 2 : Overview of 1H07 financial performance 3 : Balance sheet and equity as of June 30, 2007 4 : Outlook FY07 5 : Appendices Half Year 2007 Earnings – August 9, 2007 – 37
Slide 38: Shareholders' equity roll-forward
Shareholders’ Reserves Assets Debt Solvency Cash flows equity Shareholders’ equity roll-forward Euro million (1) 47,226 3,180 (2) 45,725 (648) (1,794) (20) (2,218) FY06 Chg in FV Dividend 1H07 Net Share Buy Others 1H07 recorded in income Backs Sh equity ROE(3) = 21.6% (1) Restated to include TSDI
Slide 39: A large and diversified invested asset base
Shareholder’s Reserves Assets Debt Solvency Cash flows equity AXA Group : a large and diversified invested asset base Economic view, 1H07 Insurance assets Bank(2) Total Sub- Sub- based on market value total L&S P&C Int % total Euro bn Euro bn Euro bn Fixed income 284 279 76% 69% 63% 75% 5 Cash & rep
Slide 40: Low exposure to US subprime residential MBS
Shareholder’s Reserves Assets Debt Solvency Cash flows equity Low exposure to US subprime residential MBS Euro million US subprime US Total % As of June 30, 2007 residential Alt-A AAA 1,743 78 1,822 80% AA 249 5 254 11% A 139 19 158 7% BBB 29 4 33 1% Below invst. grade 0 1 2 0% Market value 2,160 10
Slide 41: Table of contents
Table of contents 1 : First Half 2006 key highlights 2 : Overview of 1H06 financial performance 3 : Balance sheet and equity as of June 30, 2007 4 : Outlook FY07 5 : Appendices Half Year 2007 Earnings – August 9, 2007 – 41
Slide 42: The outlook for the remaining of 2007 is favorable
The outlook for the remaining of 2007 is favorable The current volatility in the credit markets should not have a material impact on our profitability, given the quality of our assets and the long term duration of our insurance liabilities Assuming that the global economic environment continues
Slide 43: Table of contents
Table of contents 1 : First Half 2006 key highlights 2 : Overview of 1H06 financial performance 3 : Balance sheet and equity as of June 30, 2007 4 : Outlook 2007 5 : Appendices Half Year 2007 Earnings – August 9, 2007 – 43
Slide 44: HY07 revenues reflect a strong diversification
HY07 revenues reflect a strong diversification H1 2007 IFRS revenues by operating segment(1) Asset Mgt & Other International Financial Services Insurance 5% 3% P&C H1 2007 IFRS insurance revenues by 28% geography(1) France Life & Savings 23% 63% International insurance North 4% America 19% Mediterra
Slide 45: HY07 underlying earnings reflect a strong diversification
HY07 underlying earnings reflect a strong diversification 1H07 underlying earnings by operating segment Asset Mgt & Other Financial Services International 10% Insurance 4% 1H07 insurance underlying earnings Life & Savings by geography P&C 52% 34% France 23% International insurance North 5% America 2
Slide 46: Underlying earnings per share in line with Ambition 2012
Financial Winterthur 2012 performance action plan Underlying earnings per share in line with Ambition 2012 Underlying EPS(1) net of interest charges on perpetual sub debts(2) Underlying EPS 14% growth +14% includes -2%(3) resulting from the disposal of Winterthur US and Winterthur Netherlands 1.22 1
Slide 47: Solid adjusted earnings per share
Financial Winterthur 2012 performance action plan Solid adjusted earnings per share Adjusted EPS(1) net of interest charges on perpetual sub debts(2) Adjusted EPS 8% growth +8% includes -2%(3) resulting from The disposal of Winterthur US 1.58 and Winterthur Netherlands 1.46 Lower growth than underly
Slide 48: New Business Value growth of 9%
Life & P&C Asset Group Savings Management New Business Value (NBV) growth of 9% Annual Premium NBV/APE New Business Value Equivalent (APE) Margin (NBV) Euro billion Euro million Change on a +yy% comparable basis(1) 3.9 22.8% 21.9 % 851 3.6 813 +11% -0.5pt +9% 1H06 1H07 1H06 1H07 1H06 1H07 AXA Euro 3
Slide 49: Margin analysis: underlying earnings growth driven by fees and revenues
Life & P&C Asset Group Savings Management Underlying earnings growth was primarily driven by fees and revenues Margin Analysis +yy% Change on a comparable basis(1) Euro million 1H06 1H07 1H06 1H07 1H06 1H07 AXA AXA AXA AXA 1,227 Investment 1,182 Gross margin +7% Margin 5,048 Fees & 4,679 3,152 +12%
Slide 50: Combined ratio by countries
Life & P&C Asset Group Savings Management Combined ratio by countries 1H07 Combined ratios(1) 101.0% 102.4% 97.2% 98.4% 98.4% 95.5% 95.9% -0.5 +4.1 +3.7 +5.6 -2.5 -0.8 +1.6 France Germany Belgium UK & Ireland Southern Other Total (2) Europe countries xx Change from 2006 is in %pts, at current exchan
Slide 51: AXA IM growth reflected the success of its multi expert model
Life & P&C Asset Group Savings Management AXA IM growth reflected the success of its multi expert model Breakdown by Client AUM by Channel AUM by Expertise Geography 10% 4% 19% 16% 36% 9% 53% 7% 87% 11% 49% Growth YTD Growth YTD Growth YTD Europe +17% AXA Insurance Main Fund +21% Quantitative equity
Slide 52: AllianceBernstein's activity driven by international clients
Life & P&C Asset Group Savings Management AllianceBernstein’s activity was driven by international clients, global funds and blended management styles AUM by Client AUM by Service AUM by Style 23% 38% 42% 49% 62% 58% 24% 4% Growth YTD Growth YTD Growth YTD U.S. only +7% Global & International +20% G
Slide 53: Higher average Assets Under Management
Life & P&C Asset Group Savings Management Higher average Assets Under Management AllianceBernstein & AXA Investment Managers(1) AUM average AUM closing (Euro billion) (Euro billion) +22%(2) 1,153 1,029 933 758 688 589 1 104 944 968 345 341 395 avg 1H06 avg FY06 avg 1H07 1H06 FY06 1H07 3rd party (1)
Slide 54: Analysis of other segments' underlying earnings
Life & P&C Asset Group Savings Management Analysis of other segments’ underlying earnings Change on a Euro million 1H06 1H07 comparable basis(1) AXA Corporate Solutions Assurance 44 58 +33% Other 20 62 +149% International Insurance 64 119 +70% Other Financial Services 33 13 -60% Holdings -206 -183 -
Slide 55: Impact of increase in interest rates
Shareholders’ Reserves Assets Debt Solvency Cash flows equity Impact of increase in interest rates: negative on equity, but neutral on Group economic value Unrealized capital gains attributable Sensitivity of Group economical value to shareholders (after tax) to interest rates changes Euro billion A
Slide 56: L&S reserves continued to grow fed by Unit-Linked reserves
Shareholders’ Reserves Assets Debt Solvency Cash flows equity AXA’s L&S reserves continued to grow fed by Unit-Linked reserves Gross L&S reserves Euro billion 4% L&S reserves roll-forward 491 494 Euro billion +2% 275 10 280 7 Forex Scope impact change(2) Technical (5) Market 35 -5% 34 operating appr
Slide 57: P&C reserving levels remained high
Shareholders’ Reserves Assets Debt Solvency Cash flows equity P&C reserving levels remained high Net claims reserves(1) / Net technical reserves(1) / Net claims paid Net earned premiums 276% 277% 269% 197% 203% 187% 1H06 FY 06 1H07 1H06 FY06 1H07 AXA AXA AXA+W AXA AXA AXA+W (1) Excluding internation
Slide 58: A large and diversified invested asset base
AXA Group : a large and diversified invested asset base Economic view, 1H07 Breakdown of fixed income Euro bn investments based on market value Euro bn Govies & public 132.3 Corporate bonds net of CDS 117.2 Fixed income 284(1) Debt tranches of ABS 14.6 Cash & repos 17 Other fixed income (1) 20.1 Tot
Slide 59: Details of fixed income assets: a monitored credit exposure
Details of fixed income assets: a monitored credit exposure Economic breakdown of fixed income assets by rating(1) AA AAA 26% 37% A 25% BBB 9% NR High Yield 1% 2% Average Rating A+ (1) Euro 267 billion: include Govies and Public (Euro 132 billion), corporate bonds and loans (Euro 117 billion), debt
Slide 60: Financial debt analysis: long term financing and high liquidity
Shareholder’s Reserves Assets Debt Solvency Cash flows equity Financial debt analysis: long term financing and high liquidity Total debt Unused liquidity sources (Euro billion) Cash & Cash equivalent Euro 17 bn 16.6 Undrawn credit lines Euro 6 bn 16.5 4.7 4.7 Legal maturity breakdown 7.4 2.5 2.5 4.7
Slide 61: Solvency remained very strong
Shareholder’s Reserves Assets Debt Solvency Cash flows equity Solvency remained very strong Consolidated European solvency margin(1) 186% 180% 2006 1H 2007 We are committed to maintaining a very strong financial structure (based on economic capital, regulatory solvency, gearing, interest coverage an
Slide 62: European motor securitization
Shareholder’s Reserves Assets Debt Solvency Cash flows equity European motor securitization demonstrated the benefits of diversification and its potential as a capital management tool Successful placement of Insurance Linked Securities backed by a pan European portfolio of over 6 million individual
Slide 63: Estimated shareholder's cash-flow statement
Shareholder’s Reserves Assets Debt Solvency Cash flows equity Estimated shareholder’s cash-flow statement (in Euro billion) FY06 1H07 Adjusted earnings N-1 4.3 5.1 Differences between adjusted earnings and statutory results(1) -0.4 -0.4 Increase in local solvency margin -1.0 -2.4 Local capital optim
Slide 64: Upcoming events
Upcoming events November 8, 2007 First Nine Months 2007 Activity Indicators release November 13, 2007 Ambition 2012 update January 31, 2008 Full Year 2007 Activity Indicators release February 28, 2008 Full Year 2007 Earnings release Half Year 2007 Earnings – August 9, 2007 – 64
Slide 65: FINANCIAL
A A % FINANCIAL PROTECTION Be Life Confident